Mukesh Ambani-led Reliance Industries Ltd (RIL) has been hit with a GST penalty of Rs 56.44 crore by the Joint Commissioner of Central GST, Ahmedabad. The company said it will challenge the order, which relates to the interpretation of blocked ITC under the GST framework.
RIL Disputes Interpretation of Blocked Credit
In a regulatory filing, Reliance stated that the order has been passed by misinterpreting the ITC provisions, ignoring the service classifications made by the service provider.
"The Order has been passed interpreting input tax credit falling under blocked credit ignoring classification of services by service provider. The Company intends to file an appeal against the Order," RIL said.
The company will file an appeal before the appropriate authority and defend its stand on the ITC treatment.
Penalty Has No Operational Impact, Says RIL
Reliance clarified that the financial exposure is limited only to the penalty amount, and the order does not affect its operations or business activities.
Issued Under Section 74 of GST Law
The penalty order dated November 25 has been issued under:
- Section 74 of the Central Goods and Services Tax (CGST) Act, 2017,
- The Gujarat Goods and Services Tax (GGST) Act, 2017, and
- Relevant provisions of the Integrated GST (IGST) Act, 2017.
Section 74 covers cases involving alleged tax short-payment or wrongful ITC claim due to fraud, suppression, or misstatement, though companies often challenge such interpretations in appellate forums.
What's Next for Reliance?
RIL's appeal will bring the dispute into the GST appellate mechanism, a space where blocked credit classifications and ITC eligibility remain among the most contested issues under India's indirect tax regime.
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